March 2019 | John Strong, ASPI
Yep, Value Analysis is a hot topic in healthcare right now. It seems like every healthcare provider is using something called “value analysis” to vet new products and examine the cost in use of those products. Unfortunately, more than half of healthcare providers are calling their new products committee a value analysis committee. There are miles of difference between the two. Sales representatives need to ask for a clear definition of how a target customer’s process works and take notes to ensure an appropriate response.
Value Analysis (VA) was not created by healthcare professionals. Rather, it was created by a General Electric engineer named Lawrence D. Miles during World War II, in response to a shortage of labor, raw materials and parts. His purpose “was to solve problems and reduce costs while improving performance and quality.”2
Well-performing provider teams generally create a “vision” for their VA efforts. An example might be:
A system-wide Value Analysis process that evaluates product selection and utilization focusing on evidence-based clinical outcomes, quality, service, reimbursement and costs resulting from the collaboration of highly engaged physicians, caregivers and management.
Unfortunately, all too many healthcare VA committees act as a barrier for the adoption of new technology and focus only on price. Sales assessment of a customer or potential customer’s VA process is essential. In addition, a key question is whether a committee only looks at new products. More mature VA processes usually work through high cost procedures, especially when patient implantable devices are in use.
Impact for Medical Device Companies: Correct VA technique follows a similar process and should not be a “mystery” to anyone, yet that’s what we often hear. It takes research to find out what a customer is doing—and education to match classic VA with the techniques in use at a facility or within a health system.